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The Misery of Burma and Pakistan

Burma

I’ve been watching Burma for a while now. Essentially because of the untapped natural resources and a population desperately hungry for development (and democracy, and freedom, and — literally — rice) smack dab between the ASEAN Tigers, India, and Bangladesh. As the other countries get more stable growth rates, Burma should (hopefully, though I refuse to hold my breath) open up more to the outside world. True, you can still make money in Burma. If you don’t have an overdeveloped sense of smell or morality. Why else would Japan (for the rice) and India (for the natural gas and the rice) be such good friends with such unfriendly people? But, if you had time to wait, and other places to put your dollars while you wait, Burma mightn’t be a bad place to keep your eye on. Nevertheless, this story from AsiaSentinel gives some pause.

Insurgencies by ethnic minorities since independence and sanctions imposed by the US and other Western countries since 1990 are not the main reasons for the poor performance of Burma’s economy, the study said. “Instead, misguided economic policies, compounded by extraordinary neglect of the education and health sectors, have deprived the economy of the basic foundations for sustainable improvements in living standards.”

Export earnings from Burma’s growing energy sector will double in the next five years, Rieffel suggests, largely because of the gas and oil transit pipelines now being built through the country into China. This could mean annual earnings from gas, oil and other energy of more than US$6 billion, he says. That calculation is based on energy exports, mostly gas, accounting for at least 45 percent of the earnings declared for 2008.

However, international human rights groups have said most of the income from energy sales is stolen by regime leaders and squirreled away in foreign banks.

Pakistan

And Pakistan’s ability to plumb ever deeper depths continues as The Economist’s Banyan columnist notes Pakistan’s response to the most recent attack on an Ahmadiya Mosque. I have personal reasons not to like Pakistan and Pakistanis overmuch, so I have to lean over backwards to avoid any cognitive bias, but to me this is another reason to stay away from the country as an investor.